Considering the financial information of one company on its own does not usually give an investor sufficient information to make an investment decision. This is because we don’t have anything to compare the numbers to. For example, a company with a declining profit margin might be a good investment in a cyclical industry if all other companies in that same industry are suffering from an even greater decline, or a company with growing profits may be a bad investment if all its peers are growing even more.

Short of ordering every financial report and plugging all the numbers manually into a balance sheet, this exercise can be performed relatively easily using a trading screen.

Now, many people get a bit confused by trading screens because they simply plug in made up numbers which seem reasonable to them. Then when a result is obtained there is nothing to compare the results against. To use a screen effectively it is important to plug in only real numbers of specific companies.

Below, we run through a simple exercise using KLSETRACKER’s trading screen (or filter) to show you how a trading screen should be used properly.

SCREEN 1

In the login screen below you will see the filter options on the right (in the red circle).

SCREEN 2

As you can see, there are three filters - Market Price Ratios, Accounting KPIs and Total Yield). We’re not sure why KLSETRACKER does not just have them all on the same page since combining them altogether would result in a more powerful filter. But we shall use the Accounting KPI filters in this example.

The next step in the exercise would be to find a company we want to compare against others. We have written a little bit on MFCB recently so lets use that as an example.

Either by looking at the annual report, or online (or looking up the counter’s financials in KLSETRACKER itself) find a number (e.g. ROE or RORA) and plug that into the filter. In this example I used the ROR, which 9.64%.

This brings up MFCB as per the below (in the middle of the page).

In the final step, note down the key ratios for MFCB you are interested in. Our advice is to just take one ratio from each indicator group (i.e. 1 from “net profitability”, 1 from “investment”, 1 from “liquidity” and 1 from “gearing”), otherwise the filter will exclude too many companies.

Then go back to the filter page and plug in these numbers, and voila! you will come up with a list of companies which share the same ratios as the company you are looking at. For MFCB, I plugged in the ROR, dividend yield, operating cash flow ratio, leverage ratio and operating cashflow/total assets ratio and got these 7 other blue chips: BAT, BJOTO, DIGI, NESTLE, TANJONG, YTLPWR.

This tells me that MFCB is a fairly well run company and can stack up against these other giants. Also, it is cheap compared to them, with a much lower PE. However, it also tells me that other companies sharing these ratios are also much more profitable.

From hereon, it’s possible to relax the numbers a little bit to capture more companies. For example it’s possible to go back into the main filter page and plug in the same numbers but use an ROE figure which is slightly lower, like 12%, instead of 14.65%. This will bring up more results.

CONCLUSION

KLSETRACKER’s trading screen is an extremely useful tool. That is not to say that it is perfect. Apart from having all the filters together we would also love to compare historical key ratios so that we can know how these change over time. (We should add that KLSETRACKER currently shows historical ratios, but offers no ability to compare them on the same screen) We would also love to be able to filter historical prices. But those features are more like icing on the cake. If you’re looking for a robust basic screen then we would recommend using this feature (especially as a tool for comparing companies !)

Happy Screening!

Disclosure Policy

Tradingmalaysia is an independant website and values its integrity greatly. Therefore it does not review services or products which it does not genuinely believe to be good, and promises to disclose any arrangements or benefits which it enjoys from services which it reviews.

For this review Tradingmalaysia would like to disclose that its editors receive free subscriptions to the KLSETRACKER services and has a rebate arrangement for referring customers.